GLYT Genlyte Grp. (MM)

LOUISVILLE, Ky., July 26 /PRNewswire-FirstCall/ -- The Genlyte Group Incorporated (NASDAQ:GLYT) today announced record second quarter net sales of $408.9 million, an increase of 11.7% compared to $366.1 million in the second quarter of 2006. The Company also reported record second quarter earnings per share of $1.29, a 4.0% increase over the $1.24 reported for the second quarter of 2006. Second quarter net income increased to $37.4 million compared to $35.9 million reported for the second quarter of 2006. The second quarter 2006 income before income taxes included a one-time $7.2 million ($4.4 million after-tax) foreign currency exchange gain related to the return of capital from Canada. The $7.2 million ($4.4 million after- tax) gain was recognized through a reduction of the currency translation adjustment section of accumulated other comprehensive income, which is part of stockholder's equity but not earnings. Excluding this 2006 foreign currency exchange gain, net income and earnings per share improved 18.7% and 18.3% respectively. Year-to-date earnings per share were $2.49 compared to $2.94 for the first half of 2006. Year-to-date net income was $72.3 million compared to $84.5 million last year. The first quarter 2006 net income included a one-time net tax benefit of $24.7 million, or $0.86 per share, related to a change in corporate tax structuring. In addition, the second quarter of 2006 included the $7.2 million ($4.4 million after-tax) or $0.15 per share impact of the foreign currency exchange gain. After excluding the combined $1.01 impact of these two items from the 2006 year-to-date earnings per share of $2.94, the first half 2007 earnings per share increased 29.0%. Sales during the first six months of 2007 increased 15.5% to $803.3 million from $695.3 million in 2006. Chairman, President and CEO Larry Powers said, "We are pleased to report second quarter increases in both sales and earnings. Our focus on higher margin product lines and the price increases helped us achieve higher sales and gross margins for the second quarter. "Our commercial lighting business grew moderately from last year, but the growth was offset by weakness in the residential sector. In addition, results for the second quarter of 2006 include a spike in shipments in advance of a price increase during June 2006. Our core commercial business is participating in the commercial construction cyclical recovery that began earlier this year and should continue for the next year or two. However, we are seeing pockets of softness in the light commercial, suburban retail, and stock and flow parts of the business. "We are pleased with the second quarter gross margin increase to 40.6% compared to 39.4% last year. The operating profit margin increased during the second quarter to 14.7% from 14.0%. These margin increases are primarily attributed to the effective price increases, increases in volume which leverage our fixed costs, and the benefit of mix from selling higher value added products. The operating profit margin improvement was partially offset by the impact of working capital currency translation losses totaling $2.3 million, which were recognized during the current year related to the strengthening of the Canadian dollar. "We continue to see cumulative year-over-year cost increases in health care, aluminum, zinc and other materials. Key concerns in the near future are transportation and energy costs, and continued growth of the U.S. economy. We believe the commercial construction markets will grow in 2007; however, unexpected economic changes could alter expectations. Our short-term plan is to control expenses and provide outstanding service, while adding innovative new products." Vice President and Chief Financial Officer Bill Ferko stated, "During the quarter cash flow from operations less plant and equipment investments provided $16.4 million compared to the same quarter last year when we generated $16.3 million. For the first six months of 2007 cash flow from operations less plant and equipment investments provided $916 thousand compared to the first six months of 2006 when we used $4.2 million. In addition, working capital (current assets less current liabilities) as of June 30, 2007 increased by $47.0 million to $230.1 million compared to July 1, 2006, but was significantly impacted by cash and debt balances. Working capital less cash and short-term debt was $245.5 million (15.0% of annualized sales) as of June 30, 2007, compared to working capital less cash and short- term debt of $238.3 million (16.3% of annualized sales) as of July 1, 2006. "Our balance sheet remains very strong. We closed the second quarter with cash of $66.0 million and debt of $143.2 million, or a net debt position of $77.2 million, compared to second quarter 2006 net debt of $182.3 million, and $71.2 million at the end of 2006. Our net debt decreased by $105.1 million compared to prior year even though we recently paid approximately $40 million to acquire Strand, Carsonite, and Hanover Lantern over the past twelve months." To supplement the consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the Company has presented a table of adjusted operating results, which includes non-GAAP financial information. This non-GAAP financial information is provided to enhance the user's overall understanding of the Company's current financial performance and prospects for the future. Specifically, management believes the non-GAAP financial information provides useful information to investors by excluding or adjusting certain items of operating results that were unusual and not indicative of the Company's core operating results. Management considers working capital (current assets minus current liabilities) an important measure of short-term liquidity and uses it to measure the investment in the business. In addition, management believes cash flow from operating activities less plant and equipment investments is an important measure that gives a more accurate picture of the Company's cash generation. This non-GAAP financial information should be considered in addition to, and not as a substitute for, or superior to, results prepared in accordance with GAAP. The non-GAAP financial information included in this news release has been reconciled to the nearest GAAP measure. Live audio of Genlyte's conference call with securities analysts, scheduled for 11:00 a.m. EDT on July 26, 2007, can be accessed from the investor relations section of Genlyte's website http://www.genlyte.com/ or from http://www.visualwebcaster.com/event.asp?id=41299. An audio replay of the call will be available for 90 days. The Genlyte Group Incorporated (NASDAQ:GLYT) is a leading manufacturer of lighting fixtures, controls, and related products for the commercial, industrial and residential markets. Genlyte sells lighting and lighting accessory products under the major brand names of Alkco, Allscape, Ardee, Canlyte, Capri/Omega, Carsonite, Chloride Systems, Crescent, D'ac, Day-Brite, Gardco, Guth, Hadco, Hanover Lantern, High-Lites, Hoffmeister, Lam, Ledalite, Lightolier, Lightolier Controls, Lumec, Morlite, Nessen, Quality, Shakespeare Composite Structures, Specialty, Stonco, Strand, Thomas Lighting, Thomas Lighting Canada, Vari-Lite, Vista, and Wide-Lite. Certain statements in this news release, including without limitation expectations as to future sales and operating results, constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Words such as "expects," "anticipates," "believes," "plans," "intends," "estimates," "projects," "forecasts," "outlook," and similar expressions are intended to identify such forward-looking statements. The statements involve known and unknown risks, uncertainties, and other factors which may cause the company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward- looking statements. Such factors include, but are not limited to, the following: the highly competitive nature of the lighting business; the overall strength or weakness of the economy, construction activity, and the commercial, residential, and industrial lighting markets; the ability to maintain or increase prices; customer acceptance of new product offerings; ability to sell to targeted markets; the performance of our specialty and niche businesses; availability and cost of input materials; work interruption by union employees; increases in energy and freight costs; workers' compensation, casualty and group health insurance costs; increases in interest costs arising from an increase in rates; the operating results of recent acquisitions; future acquisitions; foreign currency exchange rates; changes in tax rates or laws, and changes in accounting standards. We will not undertake and specifically decline any obligation to update or correct any forward- looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For additional information about Genlyte please refer to the Company's web site at: http://www.genlyte.com/. The table below presents a comparison of condensed consolidated statements of income (unaudited and preliminary) for the three months and six months ended June 30, 2007 and July 1, 2006, as well as adjusted net income and the impact of the adjustments on earnings per share for the one-time foreign currency exchange gain and the tax provision benefit. For the three months ended June 30, 2007 July 1, 2006 % Change Net Sales $ 408,888 $ 366,094 11.7% Operating Profit $ 60,054 $ 51,253 17.2% Net Income $ 37,354 $ 35,877 4.1% E.P.S. (1) $ 1.29 $ 1.24 4.0% Average Shares Outstanding (1) 29,066 28,830 0.8% Foreign Currency Exchange Gain (After Tax) (2) $ - $ 4,400 (100.0)% Adjusted Net Income $ 37,354 $ 31,477 18.7% Impact of Adjustment on E.P.S. $ - $ 0.15 (100.0)% For the six months ended June 30, 2007 July 1, 2006 % Change Net Sales $ 803,278 $ 695,268 15.5% Operating Profit $ 118,196 $ 94,830 24.6% Net Income $ 72,319 $ 84,504 (14.4)% E.P.S. (1) $ 2.49 $ 2.94 (15.3)% Average Shares Outstanding (1) 29,032 28,723 1.1% Foreign Currency Exchange Gain (After Tax) (2) $ -- $ 4,400 (100.0)% Tax Provision Benefit (2) $ -- $ 24,715 (100.0)% Adjusted Net Income $ 72,319 $ 55,389 30.6% Impact of Adjustments on E.P.S. $ -- $ 1.01 (100.0)% (1) Fully diluted (2) The one-time foreign currency exchange gain and the tax provision benefit relating to the change in corporate tax structuring of GTG are provided to present 2006 results on a more comparable basis with 2007. The foregoing unaudited figures have been approved by the management of The Genlyte Group Incorporated for official release on the date indicated. THE GENLYTE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND JULY 1, 2006 (Amounts in thousands, except earnings per share data) (Unaudited and Preliminary) Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2007 2006 2007 2006 Net sales $ 408,888 $ 366,094 $ 803,278 $ 695,268 Cost of sales 242,864 221,869 479,749 425,053 Gross profit 166,024 144,225 323,529 270,215 Selling and administrative expenses 105,550 91,819 204,280 173,607 Amortization of intangible assets 420 1,153 1,053 1,778 Operating profit 60,054 51,253 118,196 94,830 Interest expense, net 1,687 1,689 3,383 2,808 Foreign currency exchange gain on investment - (7,184) - (7,184) Income before income taxes 58,367 56,748 114,813 99,206 Income tax provision 21,013 20,871 42,494 14,702 Net income $ 37,354 $ 35,877 $ 72,319 $ 84,504 Earnings per share: Basic $ 1.31 $ 1.27 $ 2.54 $ 3.01 Diluted $ 1.29 $ 1.24 $ 2.49 $ 2.94 Weighted average number of shares outstanding: Basic 28,510 28,152 28,434 28,057 Diluted 29,066 28,830 29,032 28,723 THE GENLYTE GROUP INCORPORATED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2007 AND DECEMBER 31, 2006 (Amounts in thousands) (Unaudited and Preliminary) June 30, December 31, 2007 2006 Assets: Current Assets: Cash $ 65,962 $ 76,690 Accounts receivable, less allowances for doubtful accounts of $6,561 and $7,019 as of June 30, 2007 and December 31, 2006 241,468 202,116 Inventories 186,091 194,773 Deferred income taxes and other current assets 43,871 39,467 Total current assets 537,392 513,046 Property, plant and equipment, at cost 503,475 478,610 Less: accumulated depreciation and amortization 318,752 299,094 Net property, plant and equipment 184,723 179,516 Goodwill 368,621 345,203 Other intangible assets, net of accumulated amortization 150,361 144,927 Other assets 3,080 3,493 Total Assets $1,244,177 $1,186,185 Liabilities & Stockholders' Equity: Current Liabilities: Short-term debt $ 80,570 $ 86,366 Current maturities of long-term debt 721 257 Accounts payable 132,904 136,146 Accrued expenses 93,071 118,528 Total current liabilities 307,266 341,297 Long-term debt 61,945 61,313 Deferred income taxes 36,400 38,935 Accrued pension and other long-term liabilities 37,366 38,872 Total liabilities 442,977 480,417 Stockholders' Equity: Common stock 286 284 Additional paid-in capital 91,621 80,220 Retained earnings 683,672 611,998 Accumulated other comprehensive income 25,621 13,266 Total stockholders' equity 801,200 705,768 Total Liabilities & Stockholders' Equity $1,244,177 $1,186,185 THE GENLYTE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND JULY 1, 2006 (Amounts in thousands) (Unaudited and Preliminary) 2007 2006 Cash Flows From Operating Activities: Net income $ 72,319 $ 84,504 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,307 15,407 Net loss from disposals of property, plant and equipment 203 39 Benefit for deferred income taxes (8,562) (27,106) Stock-based compensation expense 1,012 268 Foreign currency exchange gain on investment - (7,184) Minority interest - (1,054) Changes in assets and liabilities, net of effect of acquisitions: (Increase) decrease in: Accounts receivable (34,900) (33,753) Inventories 3,406 (7,116) Deferred income taxes and other current assets 2,349 12,061 Intangible and other assets 167 (379) Increase (decrease) in: Accounts payable (7,965) (470) Accrued expenses (29,975) (21,441) Deferred income taxes, long- term 6,094 (7,320) Accrued pension and other long-term liabilities (1,861) 815 All other, net - (282) Net cash provided by operating activities 18,594 6,989 Cash Flows From Investing Activities: Acquisitions of businesses, net of cash received (21,867) (120,330) Purchases of property, plant and equipment (17,678) (11,183) Proceeds from sales of property, plant and equipment 76 45 Purchases of short-term investments - - Proceeds from sales of short-term investments - 17,826 Net cash used in investing activities (39,469) (113,642) Cash Flows From Financing Activities: Proceeds from short-term debt 13,400 15,212 Repayments of short-term debt (19,196) - Proceeds from long-term debt 69,550 62,526 Repayments of long-term debt (70,204) (21,528) Net increase in disbursements outstanding 3,211 3,668 Exercise of stock options 6,222 3,922 Excess tax benefits from exercise of stock options 4,169 3,500 Net cash provided by financing activities 7,152 67,300 Effect of exchange rate changes on cash 2,995 1,553 Net decrease in cash (10,728) (37,800) Cash at beginning of period 76,690 78,042 Cash at end of period $ 65,962 $ 40,242 THE GENLYTE GROUP INCORPORATED SELECTED SEGMENT DATA FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007 AND JULY 1, 2006 (Amounts in thousands) (Unaudited and Preliminary) Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, 2007 2006 2007 2006 Net sales: Commercial segment $ 308,529 $ 269,137 $ 604,241 $ 511,404 Residential segment 46,788 48,122 90,391 92,942 Industrial & other segment 53,571 48,835 108,646 90,922 Total net sales $ 408,888 $ 366,094 $ 803,278 $ 695,268 Operating profit: Commercial segment $ 44,532 $ 36,491 $ 88,461 $ 67,388 Residential segment 7,913 9,005 14,546 16,728 Industrial & other segment 7,609 5,757 15,189 10,714 Total operating profit $ 60,054 $ 51,253 $ 118,196 $ 94,830 DATASOURCE: The Genlyte Group Inc. CONTACT: William G. Ferko, CFO of The Genlyte Group Inc., +1-502-420-9502 Web site: http://www.genlyte.com/

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